The trading session was relatively quiet on the macroeconomic front, with little major data released. Despite the thin schedule, several significant stories shaped market sentiment, led overwhelmingly by the extraordinary public debut of SpaceX.
SpaceX Extends Its Record-Breaking IPO Rally
SpaceX dominated investor attention as it continued an unprecedented post-IPO surge. Shares climbed another 19.5% during the session, building on the 19% jump recorded during Friday's debut. That combined momentum pushed and held the company's valuation firmly above $2 trillion.
Investor demand was described as intense. By midday, more than 120 million shares had already changed hands. Underwriters exercised their full over-allotment option, which raised the total proceeds from the offering to a record-setting $85.7 billion.
CEO Elon Musk added further fuel to the rally over the weekend by projecting that SpaceX could generate roughly $1 trillion in annual revenue by 2030. This forecast stands in stark contrast to the company's actual recent results: it reported just $18.7 billion in revenue last year, along with a loss of nearly $5 billion.
Investors appear to be betting that the fresh injection of capital will accelerate the company's most ambitious projects. These include its Starship rockets, expanded Starlink operations, AI infrastructure, and even the potential development of orbital data centers. Despite the enthusiasm, critics remain skeptical. They question whether the company's valuation — which represents a multiple of about 112 times last year's revenue — is realistic given current performance.
OpenAI Faces Regulatory Scrutiny Ahead of Its IPO
Staying within the AI sector, OpenAI is encountering new regulatory pressure at a critical moment, just as it moves closer to entering the public markets. A coalition of state attorneys general has reportedly opened an investigation into the company.
New York's attorney general has issued a subpoena seeking documents tied to a broad set of concerns. These include consumer data practices, user engagement, health and child safety issues, advertising, and the behavior of OpenAI's AI models. This probe follows closely on the heels of a lawsuit filed by Florida against OpenAI and its CEO, Sam Altman, as well as the company's confidential IPO filing submitted to the SEC earlier in the month.
OpenAI has responded by stating that it takes these concerns seriously and plans to work constructively with regulators. Nevertheless, the investigation introduces an additional layer of uncertainty for investors who are currently weighing the risks and opportunities surrounding what is shaping up to be one of the most anticipated tech IPOs of the year.
Housing Market Sentiment Remains Subdued
On the limited macroeconomic data released, a notable point came from the housing sector. Home builder sentiment remained subdued even though other housing market data has shown some encouraging signs.
The NAHB report attributed the weak confidence to several persistent headwinds: rising material costs, elevated mortgage rates, and ongoing affordability challenges weighing on the market. As a result, confidence ticked lower for the month. This marked the 14th consecutive month that the gauge has remained below 40 — a streak of weakness not seen since the 2011 to 2012 period.
Trade Tensions and the G7 Summit
President Trump arrived in France for the G7 summit, where the dominant storyline has been the build-up around a potential deal with Iran. While trade, the war in Ukraine, NATO, and technology are all expected to feature on the agenda, the Iran war and its economic effects are anticipated to dominate the conversations at the summit.
In a related trade development, Trump reportedly warned France to scrap its tech sales taxes or face a 100% tariff on wine and champagne. The tax in question involves a 3% levy applied to large American firms — including Meta, Alphabet, and Amazon — on the gross revenues they generate within France.
What to Watch Going Forward
Several key events are on the horizon for the days ahead.
Housing data: In light of the day's weak sentiment reading, more housing figures are due, specifically housing starts and building permits. Economists are expecting modest declines in both reports. The expectation is that more than 4% fewer homes began construction last month compared to April, with the consensus for housing starts coming in at about 1.41 million. Permits are only expected to fall by about 0.2% (two-tenths of one percent) to 1.42 million. At last check, the market had roughly a four-and-a-half-month supply of homes, making the upcoming figures worth monitoring closely.
The FOMC meeting: The Federal Open Market Committee meeting is getting underway, notably marking Kevin Warsh's first such meeting. The interest rate decision, due Wednesday at the end of the two-day meeting, has been largely priced in. The greater focus will therefore be on what Warsh has to say once the meeting concludes.
Central bank action overseas: A significant night for central banks is also expected. The Bank of Japan (BOJ) is anticipated to hike rates by 25 basis points, drawing attention to the dollar-yen currency pair. Added volatility could arise from an unusual circumstance: the deputy governor of the central bank is set to take the reins because the actual governor is in the hospital. Additionally, key China economic data is also scheduled for release.
Questions Raised and Answered
What is sticking out about the session? Beyond the SpaceX IPO, the standout data point was the subdued home builder sentiment, which declined for the 14th straight month below the 40 threshold due to rising material costs, elevated mortgage rates, and affordability challenges.
What should investors look out for tomorrow? Housing starts and building permits, both expected to show modest declines, are on the radar given the day's weak sentiment reading.
Which central bank events are coming up? The FOMC decision on Wednesday — Kevin Warsh's first meeting — and the BOJ's expected 25-basis-point hike tonight, alongside China data, are the key items to watch.